May 2021
26May

How Far Could Pension Funds Drive Sustainable Investing?

Pension funds could be a formidable force in getting companies to embrace environmental, social, and governance (ESG) values such as combating climate change or advancing employment equity. Yet they must align those goals with their fiduciary duty of protecting the retirement funds of their members. In the U.S., they must also overcome challenges including gaps in ESG adoption metrics and ambiguity about government rules on such investing. Those were the key takeaways from a two-day conference organized by Wharton’s...

May 26, 2021
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26May

The Future of Public DC Programs Includes a Focus on Financial Wellness

There is a movement among private-sector employers to offer not just a retirement plan, but a program of benefits that addresses all aspects of employees’ finances. But employees in the public sector—including those in public defined contribution (DC) plans—need holistic financial wellness help, too. Less than half of public-sector employees (43%) feel very/extremely confident making financial decisions on their own, according to the results of a 2019 study by the Center for State and Local Government Excellence (SLGE). Fifty-four percent...

May 26, 2021
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26May

US. Forensic Investigation Of Chicago Police Pension Fund Underway

The Chicago Policemen’s Annuity and Benefit Fund (PABF) —commonly referred to as the Chicago Police Pension Fund—is one of the worst funded public pension plans in the United States today, with a funding ratio of only 23 percent. A group of retired and disabled officers, along with widows, has long questioned the trustees and management of the struggling pension. Dissatisfied with the responses they received, the group formed the CPD Pension Board Accountability Group. Funds were raised to commission an independent...

May 26, 2021
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25May

US. New York City Pensions to Fund $250 Million Apartment Venture

For New York City’s pension funds, there’s no time like now to invest in new apartments. The two largest retirement systems -- covering public school teachers and municipal employees -- are teaming up with developer Hudson Cos., to allocate $250 million for construction of middle-income housing in the city and surrounding suburbs, the developer said. The pensions will commit $243.75 million of that equity, which will be leveraged to build as many as 10 projects or 2,000 units, said Joe Riggs,...

May 25, 2021
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21May

US. Biden orders federal climate-risk financial strategy, with implications for homeowners, pensions and government contracts

President directs agencies to analyze and mitigate the risk climate change poses to the financial system, and he’ll use the findings in the budget process. President Joe Biden is mandating a federal government strategy to quantify climate-change risks to public and private financial assets. Banking, housing and agriculture regulators are among those who will be asked to use climate risk in their supervision of major industries, including the lending of federal funds and decisions on federal contracts. Some Department of Labor-regulated...

May 21, 2021
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20May

How Competitive Are Income Annuity Providers Over Time?

By David Blanchett, Michael S. Finke, Branislav Nikolic The 2019 SECURE Act provides safe harbor protections to employers who evaluate the costs of providing guaranteed income including gathering information on competing providers. Annuities can be more difficult to evaluate than mutual funds because annuity expenses can be opaque, financial strength matters, and insurer competitiveness can change over time. We find significant variation in the payout rates across providers over time. While the payout rankings of annuity companies (e.g., best to...

May 20, 2021
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19May

US. What a Year Without Retirement Savings Can Do to Participant Outcomes

As americans faced financial hits related to the COVID-19 pandemic, their retirement savings might have suffered. Many employees were laid off or furloughed, and the Coronavirus Aid, Relief and Economic Security (CARES) Act made it possible for retirement plan participants to tap into their savings through increased distribution and loan amounts if they needed the money to make ends meet. Read also Retirement Planning Not A Priority For New Zealanders Fidelity Investments’ Pandemic Impact research, conducted last September, found employees were...

May 19, 2021
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18May

Managing a Retirement Plan Doesn’t Have to Be a Headache

COVID-19 wreaked havoc on our economy. Customers vanished and supply lines evaporated, as employees adjusted to a new paradigm of working from home. Wild swings in securities markets were a symptom of the pandemic. C-suite executives, who also found themselves working remotely, are still being pulled in multiple directions. Among the hardest-hit industries have been retail, oil & gas, hospitality and travel. In the past year, we’ve seen top national brands such as J.Crew and Neiman Marcus seeking reorganization under...

May 18, 2021
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14May

US. Biden’s $86 Billion Pension Rescue Set to Boost Corporate Bonds

U.S. President Joe Biden’s pension bailout might do more than just support troubled retirement plans. It could also spur tens of billions of dollars in demand for corporate bonds with the lowest investment-grade ratings, according to Citigroup Inc. Struggling multi-employer pensions, which are often tied to unions, will be able to apply for special financial assistance, thanks to the $1.9 trillion pandemic-relief bill signed into law in March. Pension Benefit Guaranty Corp., which insurers the plans, will make a single...

May 14, 2021
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13May

Have scale effects on cost margins of pension fund investment portfolios disappeared?

By Jacob Antoon Bikker, Jeroen Meringa Investment costs of pension funds are crucial for their returns. Consolidation in the pension fund market proceeds continuously, often with cost savings as the main argument. Unused economies of scale in the pension fund investment costs, however, have declined over the years to values close to zero, except for the very small pension funds. This paper investigates investment economies of scale in the Netherlands and pays special attention to the non-linear relationship between investment...

May 13, 2021
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